Category Archives: Technology

A member of the activist collective Anonymous is claiming to be have emails and documents which prove “fraud” was committed by Bank of America employees, and the group says it’ll release them on Monday. The member, who goes by the Twitter handle OperationLeakS, has already posted an internal email from the formerly Bank of America-owned Balboa Insurance Company

The email is between Balboa Insurance vice president Peggy Johnson and other Balboa employees. (Click right to enlarge.) As far as we can tell, it doesn’t show anything suspicious, but was posted by OperationLeaks as a teaser. He also posted emails he claims are from the disgruntled employee who sent him the material. In one, the employee says he can “send you a copy of the certified letter sent to me by an AVP of BofA’s [HR department] telling me I am banned from stepping foot on BofA property or contacting their employee ever again.”

OperationLeaks, which runs the anti-Bank of America site BankofAmericasuck.com, says the employee contacted the group to blow the whistle on Bank of America’s shady business practices. “I seen some of the emails… I can tell you Grade A Fraud in its purest form…” read one tweet. “He Just told me he have GMAC emails showing BoA order to mix loan numbers to not match it’s Documents.. to foreclose on Americans.. Shame.”

An Anonymous insider told us he believes the leak is real. “From what I know and have been told, it’s legit,” he said. “Should be a round of emails, then some files, possible some more emails to follow that.” The documents should be released Monday on Anonleaks.ch, the same site where Anonymous posted thousands of internal emails from hacked security company HBGary last month. That leak exposed a legally-questionable plot to attack Wikileaks and ultimately led to the resignation of HBGary CEO Aaron Barr.

Anonymous said late Sunday evening, however, “this is part 1 of the Emails.” So perhaps more incriminating correspondence is to come. And to be honest, these messages could be incredibly damaging, but we’re not mortgage specialists and don’t know if this is or isn’t common in the field. The beauty is, you can see and decide for yourself at bankofamericasuck.com.

But for those who want a simple explanation, here’s a summary of the content.

The Source

The ex-Balboa employee tells Anonymous that what he/she sends will be enough to,

crack [BofA’s] armor, and put a bad light on a $700 mil cash deal they need to pay back the government while ruining their already strained relationship with GMAC, one of their largest clients. Trust me… it’ll piss them off plenty.

The source then sends over a paystub, an unemployment form, a letter from HR upon dismissal and his/her last paystub and an ID badge.

He/she also describes his/herself:

My name is (Anonymous). For the last 7 years, I worked in the Insurance/Mortgage industry for a company called Balboa Insurance. Many of you do not know who Balboa Insurance Group is, but if you’ve ever had a loan for an automobile, farm equipment, mobile home, or residential or commercial property, we knew you. In fact, we probably charged you money…a lot of money…for insurance you didn’t even need.

Balboa Insurance Group, and it’s largest competitor, the market leader Assurant, is in the business of insurance tracking and Force Placed Insurance… What this means is that when you sign your name on the dotted line for your loan, the lienholder has certain insurance requirements that must be met for the life of the lien. Your lender (including, amongst others, GMAC… IndyMac… HSBC… Wells Fargo/Wachovia… Bank of America) then outsources the tracking of your loan with them to a company like Balboa Insurance.

The Emails

Next comes the emails that are supposed to be so damaging. The set of emails just released shows conversational exchanges between Balboa employees.

The first email asks for a group of GMAC DTN’s to have their “images removed from Tracksource/Rembrandt.” The relevant DTNs are included in the email — there’s between 50-100 of them.

In reply, a Balboa employee says that the DTN’s cannot be removed from the Rembrandt, but that the loan numbers can be removed so “the documents will not show as matched to those loans.” But she adds that she needs upper management approval before she moves forward, since it’s an unusual request.

Then it gets approved. And then, one of the Balboa employees voices their concern. He says,

“I’m just a little concerned about the impact this has on the department and the company. Why are we removing all record of this error? We have told Denise Cahen, and there is always going to be the paper trail when one of these sent documents come back. this to me seems to be a huge red flag for the auditors… when the auditor sees the erroneous letter but no SOR trail or scanned doc on the corrected letter… What am I missing? This just doesn’t seem right to me.

We suspect this is the type of email that Anonymous believes shows BofA fraud:

A Bank of America spokesman told Reuters on Sunday that the documents had been stolen by a former Balboa employee, and were not tied to foreclosures. “We are confident that his extravagant assertions are untrue,” the spokesman said.

The e-mails dating from November 2010 concern correspondence among Balboa employees in which they discuss taking steps to alter the record about certain documents “that went out in error.” The documents were related to loans by GMAC, a Bank of America client, according to the e-mails.

“The following GMAC DTN’s need to have the images removed from Tracksource/Rembrandt,” an operations team manager at Balboa wrote. DTN refers to document tracking number, and Tracksource/Rembrandt is an insurance tracking system.

The response he receives: “I have spoken to my developer and she stated that we cannot remove the DTNs from Rembrandt, but she can remove the loan numbers, so the documents will not show as matched to those loans.”

According to the e-mails, approval was given to remove the loan numbers from the documents.

A member of Anonymous told DealBook on Monday that the purpose of his Web site was to bring attention to the wrongdoing of banks. “The way the system is, it’s made to cheat the average person,” he said.

He had set up a Web site to post bank data that WikiLeaks has said it would release, and was subsequently contacted this month by the former Balboa employee. It has been speculated that the documents, which have yet to be released, would focus on Bank of America. The spokesman for Anonymous said he had no direct ties to WikiLeaks, which is run by Julian Assange.

WikiLeaks’ founder, Julian Assange, has threatened to leak damning documents on Bank of America since 2009. And Anonymous has backed WikiLeaks’ mission as far as the free flow of information. But these e-mails date from November 2010. Plus, they don’t exactly amount to a smoking gun. Whether or not the e-mails prove real, it’s clear Bank of America should have expanded its negative-domain-name shopping spree beyond BrianMoynihanSucks.com.

The charge made in this Anonymous release (via BankofAmericaSuck) is that Bank of America, through its wholly-owned subsidiary Balboa Insurance and the help of cooperating servicers, engaged in a mortgage borrower abuse called “force placed insurance”. This is absolutely 100% not kosher. Famed subprime servicer miscreant Fairbanks in 2003 signed a consent decree with the FTC and HUD over abuses that included forced placed insurance. The industry is well aware that this sort of thing is not permissible. (Note Balboa is due to be sold to QBE of Australia; I see that the definitive agreement was entered into on February 3 but do not see a press release saying that the sale has closed)

While the focus of ire may be Bank of America, let me stress that this sort of insurance really amounts to a scheme to fatten servicer margins. If this leak is accurate, the servicers at a minimum cooperated. If they got kickbacks, um, commissions, they are culpable and thus liable.

As we have stated repeatedly, servicers lose tons of money on portfolios with a high level of delinquencies and defaults. The example of Fairbanks, a standalone servicer who subprime portfolio got in trouble in 2002, is that servicers who are losing money start abusing customers and investors to restore profits. Fairbanks charged customers for force placed insurance and as part of its consent decree, paid large fines and fired its CEO (who was also fined).

Regardless, this release lends credence a notion too obvious to borrowers yet the banks and its co-conspirators, meaning the regulators, have long denied, that mortgage servicing and foreclosures are rife with abuses and criminality. Here’s some background courtesy Barry Ritholtz:

When a homeowner fails to keep up their insurance premiums on a mortgaged residence, their loan servicer has the option/obligation to step in to buy a comparable insurance policy on the loan holder’s behalf, to ensure the mortgaged property remains fully insured….

Consider one case found by [American Banker’s Jeff] Horwitz. A homeowner’s $4,000 insurance policy, was paid by the loan servicer, Everbank via escrow. But Everbank purposely let that insurance policy lapse, and then replaced it with a different policy – one that cost more than $33,000. To add insult to injury, the insurer, a subsidiary of Assurant, paid Everbank a $7,100 kickback for giving it such a lucrative policy — and, writes Horwitz, “left the door open to further compensation” down the road.

That $33,000 policy — including the $7,100 kickback – is an enormous amount of money for any loan servicer to make on a single property. The average loan servicer makes just $51 per loan per year.

Here’s where things get interesting: That $33,000 insurance premium is ultimately paid by the investors who bought the loan.

And the worst of this is….the insurance is often reinsured by the bank/servicer, which basically means the insurance is completely phony. The servicer will never put in a claim to trigger payment. As Felix Salmon noted,

This is doubly evil: it not only means that investors are paying far too much money for the insurance, but it also means that, as both the servicer and the ultimate insurer of the property, JPMorgan Chase has every incentive not to pursue claims on the houses it services. Investors, of course, would love to recoup any losses from the insurer, but they can’t bring such a claim — only the servicer can do that.

Note there are variants of this scheme where insurance is charged to the borrower (I’ve been told of insurance being foisted on borrowers that amounts to unconsented-to default insurance, again with the bank as insurer; this has been anecdotal with insufficient documentation, but I’ve heard enough independent accounts to make me pretty certain it was real)

Just because something has a lot of anecdotal evidence behind it doesn’t necessarily mean the specific case is true. But the forced-place insurance scam has been part of other servicer lawsuits, so it definitely exists. Whether this set of emails shows that taking place is another matter. Apparently this is just the first Anonymous email dump, so there should be more on the way

Yet however inconclusive the e-mails may be, the leak may have wider implications as Anonymous gradually proves itself a source of comeuppance for disgruntled employees with damning information about a company or institution. Once the domain of WikiLeaks, the arrest of key whistleblower Bradley Manning suggested the site founded by fellow incarcerate Julian Assange could not always protect its sources. “A lot depends on the impact of this week,” says Gabriella Coleman, a professor at NYU who is researching Anonymous, who added that “Anonymous could go in that [WikiLeaks] direction.”

Anonymous is not an institution like WikiLeaks. It is global, has no leader, no clear hierarchy and no identifiable spokespeople save for pseudo-representatives like Gregg Housh (administrator of whyweprotest.net) and Barrett Brown.

That hack led, rather organically, to the establishment of AnonLeaks.ru, a Web site where the Anonymous hackers posted tens of thousands of HBGary e-mails in a handy web viewer. While it took just five supporters to hack HBGary, hundreds more poured through the e-mails to identify incriminating evidence, leading to more press reports on the incident.

Such is the nature of Anonymous–global, fluid, intelligent, impossible to pin down–that it is could become an increasingly popular go-to for people wishing to vent damaging information about an institution with questionable practices.

The collective already receives dozens of requests each month from the public to attack all manner of unsavoury subjects, from personal targets to the government of Libya, from Westboro Baptist Church to Facebook. It rarely responds to them–as one Anonymous member recently told me, “we’re not hit men.”

Yet for all its facets as both hot-tempered cyber vigilantes and enlighteners of truth, Anonymous is becoming increasingly approachable, as the latest emails between OperationLeakS and the former BoA employee show. Assuming this particular employee doesn’t end up languishing in jail like Manning, more people may now be inclined to follow suit.

The Army announced 22 additional charges on Wednesday against Pfc. Bradley Manning, the military intelligence analyst who is accused of leaking a trove of government files to WikiLeaks a year ago.

The new charges included “aiding the enemy”; wrongfully causing intelligence to be published on the Internet, knowing that it was accessible to the enemy; multiple counts of theft of public records, transmitting defense information and computer fraud. If he is convicted, Private Manning could be sentenced to life in prison.

“The new charges more accurately reflect the broad scope of the crimes that Private First Class Manning is accused of committing,” said Capt. John Haberland, an Army spokesman.

The charges provide new details about when prosecutors believe that Private Manning downloaded copies of particular files from a classified computer system in Iraq. For example, the charges say he copied a database of more than 250,000 diplomatic cables between March 28 and May 4, 2010.

Most of the charges add little to the ones already filed, but the most serious new charge is for “aiding the enemy,” a capital offense under Article 104 of the Uniform Code of Military Justice. Although military prosecutors stated that they intend to seek life imprisonment rather than the death penalty for this alleged crime, the military tribunal is still empowered to sentence Manning to death if convicted.

Article 104 — which, like all provisions of the UCMJ, applies only to members of the military — is incredibly broad. Under 104(b) — almost certainly the provision to be applied — a person is guilty if he “gives intelligence to or communicates or corresponds with or holds any intercourse with the enemy, either directly or indirectly” (emphasis added), and, if convicted, “shall suffer death or such other punishment as a court-martial or military commission may direct.” The charge sheet filed by the Army is quite vague and neither indicates what specifically Manning did to violate this provision nor the identity of the “enemy” to whom he is alleged to have given intelligence. There are, as international law professor Kevin Jon Heller notes, only two possibilities, and both are disturbing in their own way.

In light of the implicit allegation that Manning transmitted this material to WikiLeaks, it is quite possible that WikiLeaks is the “enemy” referenced by Article 104, i.e., that the U.S. military now openly decrees (as opposed to secretly declaring) that the whistle-blowing group is an “enemy” of the U.S. More likely, the Army will contend that by transmitting classified documents to WikiLeaks for intended publication, Manning “indirectly” furnished those documents to Al Qaeda and the Taliban by enabling those groups to learn their contents. That would mean that it is a capital offense not only to furnish intelligence specifically and intentionally to actual enemies — the way that, say, Aldrich Ames and Robert Hanssen were convicted of passing intelligence to the Soviet Union — but also to act as a whistle-blower by leaking classified information to a newspaper with the intent that it be published to the world. Logically, if one can “aid the enemy” even by leaking to WikiLeaks, then one can also be guilty of this crime by leaking to The New York Times.

The dangers of such a theory are obvious. Indeed, even the military itself recognizes those dangers, as the Military Judges’ Handbook specifically requires that if this theory is used — that one has “aided the enemy” through “indirect” transmission via leaks to a newspaper — then it must be proven that the “communication was intended to reach the enemy.” None of the other ways of violating this provision contain an intent element; recognizing how extreme it is to prosecute someone for “aiding the enemy” who does nothing more than leak to a media outlet, this is the only means of violating Article 104 that imposes an intent requirement.

But does anyone actually believe that Manning’s intent was to ensure receipt of this material by the Taliban, as opposed to exposing for the public what he believed to be serious American wrongdoing and to trigger reforms?

The “aiding the enemy” charge should come as no surprise to anyone, and in fact we had predicted it would come down to treason last winter. Despite the poo-pooing and endless protestations of some of Manning’s most vocal and frequently comical defenders, there is one object lesson here which can not be repeated often enough: the U.S. Military has zero sense of humor when it comes to things like this.

Assuming for the moment that this winds up in a conviction – and the Army is certainly acting like they’re playing a pretty solid hand at this point – the situation only becomes more explosive and holds the potential to be a huge thorn in the side of the Obama administration for months or years to come. Aiding the enemy during a time of war is generally considered one of the surest paths to a firing squad for obvious reasons, but it will leave the President in a sticky position.

If the military decides to drag Manning out back and shoot him – a distinct possibility – a significant portion of Barack Obama’s base will be in an uproar. They tend to be opposed to the death penalty in general, for starters. But Manning has also become something of a folk hero on the Left, allegedly helping – albeit indirectly – Julian Assange to “stick it to the man” and expose the various perceived evils of the American government. Allowing him to be executed would be a huge black eye for Obama with his base.

But if he steps in and commutes the sentence – assuming there is a legal mechanism for him to do so – then he will be seen as undercutting his own military establishment and substituting his judgment for their established practices and discipline. (Not to mention earning the tag of “going soft on traitors,” always a sure winner in an election year.)

Of course, the Army could let Obama off the hook and simply send Manning to Leavenworth for the rest of his natural life, but that’s not a great option either in terms of the political optics. Manning’s cheerleaders are already complaining about the “horrific” conditions he’s being held under and it’s only going to get worse after his conviction. (He might even lose his cable TV, library and newspaper privileges and private exercise yard.)

If convicted on the Big Count, Manning will never, ever be able to be transferred into the general military prison population and will, in all likelihood, spend the rest of his life in solitary confinement. Of all the scoundrels in legal history, traitors are probably the most unpopular with the enlisted rank and file. Dumped into a large crowd, Manning’s safety would be virtually impossible to assure. And that would leave the President with a “folk hero” of the Left locked up under the same – or worse – conditions than he’s in now for the rest of his time in office. This would be a burr under Obama’s saddle which would never go away.

It’s been a long and winding road, but it looks like we may be coming to the end of it. The Army moves at their own pace, as they should, but if they’ve filed charges now they probably feel like their case is just about ripe for presentation. Look for a court martial date to be announced in the coming weeks or months.

While we can’t be sure, I suspect the reference in Charge II, Specification 3 is to this information about the surveillance of Assange.

If I’m right about that, then it means the government is charging Manning with providing WikiLeaks with information about the surveillance being conducted, in real time, on WikiLeaks. And it would make it easy to prove both that “the enemy” got the information and that Manning intended the “enemy” to get it.

So if the government maintains that, by virtue of being an intelligence target, WikLeaks qualifies as an “enemy,” then they can also argue that Manning intentionally gave WikiLeaks information about how the government was targeting the organization. Which would make their aiding the enemy charge easy to prove.

But I also think that opens up the government to charges that it is criminalizing democracy.

As I noted above, the government’s own report on WikiLeaks describes its purpose to be increasing the accountability of democratic or corrupt governments. The government, by its own acknowledgment, knows that WikiLeaks’ intent is to support democracy. Furthermore, while the intelligence report reviews the debate about whether WikiLeaks constitutes protected free speech or criminal behavior (without taking a side in that debate), in a discussion of WikiLeaks’ efforts to verify an NGIC report on the battle of Fallujah, the report acknowledges that WikiLeaks did the kind of thing journalists do.

Wikileaks.org and some other news organizations did attempt to contact the NGIC personnel by e-mail or telephone to verify the information.

[snip]

Given the high visibility and publicity associated with publishing this classified report by Wikileaks.org, however, attempts to verify the information were prudent and show journalist responsibility to the newsworthiness or fair use of the classified document if they are investigated or challenged in court.

So while the military, according to its own report, describes WikiLeaks as a threat to the armed forces, it also acknowledges that WikiLeaks has behaved, at times, as a journalistic organization.

Mind you, all of this is simply a wildarsed guess about what the government may mean with its invocation of the “enemy.” But if I’m right, it would mean the government was threatening Manning with life in prison because he leaked information about the government’s surveillance of what it admits is an entity that engages in journalistic behavior.

Personally, though, I don’t think it would be that difficult a position for the President. The number of people complaining about Manning’s treatment can basically be whittled down to the Glenn Greenwald segment of the President’s progressive base, and many of them don’t seem to understand that Manning’s rights as a military prisoner being prosecuted under the Uniform Code Of Military Justice are distinctly different from the rights he would be entitled to as a civilian defendant in a civilian court. Additionally, many of them don’t seem to think that he did anything wrong even if the charges against him are true. I dare to say that they do not represent a majority of the Democratic Party, and certainly not a majority of the country. If Bradley Manning is convicted of aiding the enemy, then I doubt many Americans are going to care what happens to him.

Pentagon and military officials also report that investigators have made no direct link between Manning and WikiLeaks founder Julian Assange.

This has been the case for months, despite digging by federal investigators in all directions, and it makes the probability that any charges will ever be sustained against Wikileaks, Julian Assange, or any related individuals, seem very remote indeed.

On Wednesday March 2, 2011, PFC Manning was told that his Article 138 complaint requesting that he be removed from Maximum custody and Prevention of Injury (POI) Watch had been denied by the Quantico commander, Colonel Daniel J. Choike. Understandably frustrated by this decision after enduring over seven months of unduly harsh confinement conditions, PFC Manning inquired of the Brig operations officer what he needed to do in order to be downgraded from Maximum custody and POI. As even Pentagon Press Secretary Geoff Morrell has stated, PFC Manning has been nothing short of “exemplary” as a detainee. Additionally, Brig forensic psychiatrists have consistently maintained that there is no mental health justification for the POI Watch imposed on PFC Manning. In response to PFC Manning’s question, he was told that there was nothing he could do to downgrade his detainee status and that the Brig simply considered him a risk of self-harm. PFC Manning then remarked that the POI restrictions were “absurd” and sarcastically stated that if he wanted to harm himself, he could conceivably do so with the elastic waistband of his underwear or with his flip-flops.

Without consulting any Brig mental health provider, Chief Warrant Officer Denise Barnes used PFC’s Manning’s sarcastic quip as justification to increase the restrictions imposed upon him under the guise of being concerned that PFC Manning was a suicide risk. PFC Manning was not, however, placed under the designation of Suicide Risk Watch. This is because Suicide Risk Watch would have required a Brig mental health provider’s recommendation, which the Brig commander did not have. In response to this specific incident, the Brig psychiatrist assessed PFC Manning as “low risk and requiring only routine outpatient followup [with] no need for … closer clinical observation.” In particular, he indicated that PFC Manning’s statement about the waist band of his underwear was in no way prompted by “a psychiatric condition.”

While the commander needed the Brig psychiatrist’s recommendation to place PFC Manning on Suicide Risk Watch, no such recommendation was needed in order to increase his restrictions under POI Watch. The conditions of POI Watch require only psychiatric input, but ultimately remain the decision of the commander.

Given these circumstances, the decision to strip PFC Manning of his clothing every night for an indefinite period of time is clearly punitive in nature. There is no mental health justification for the decision. There is no basis in logic for this decision. PFC Manning is under 24 hour surveillance, with guards never being more than a few feet away from his cell. PFC Manning is permitted to have his underwear and clothing during the day, with no apparent concern that he will harm himself during this time period. Moreover, if Brig officials were genuinely concerned about PFC Manning using either his underwear or flip-flops to harm himself (despite the recommendation of the Brig’s psychiatrist) they could undoubtedly provide him with clothing that would not, in their view, present a risk of self-harm. Indeed, Brig officials have provided him other items such as tear-resistant blankets and a mattress with a built-in pillow due to their purported concerns.

This is just vile. The former brig commander, James Averhart, violated military rules by putting Manning on suicide watch as punishment, and was subsequently replaced by Denise Barnes. Now she’s stripping him naked to punish him for a sarcastic quip. Who is she, Nurse Ratched? Abusing someone’s mental health classification in order to subject them to torture “for their own good” is sick and sadistic, reminiscent of Soviet gulags.

First, Lt. Brian Villiard, a Marine spokesman, confirmed that Manning’s clothes were taken from him, though he didn’t give many details of the incident, except to say that it wasn’t done for punitive reasons.

“It would be inappropriate for me to explain it,” Villiard told the New York Times. “I can confirm that it did happen, but I can’t explain it to you without violating the detainee’s privacy.”

This isn’t the first time that Manning’s lawyer has asserted that the private suffered abuse in prison, and it likely won’t be the last. It’s typical of attorneys to claim that their clients are mistreated in prison, and in a case like Manning’s, these types of allegations will be eaten up by his supporters.

But based on Villiard’s statement, and the timeline of the incident, it sounds like Manning’s clothes may have been taken from him owing to suicide concerns. The Army private was previously put on suicide watch in prison. His reaction to the new charges against him could have military officials apprehensive about his mental state.

As Glenn Greenwald notes, there really only seems to be one purpose behind what Manning is being subjected to:

Let’s review Manning’s detention over the last nine straight months: 23-hour/day solitary confinement; barred even from exercising in his cell; one hour total outside his cell per day where he’s allowed to walk around in circles in a room alone while shackled, and is returned to his cell the minute he stops walking; forced to respond to guards’ inquiries literally every 5 minutes, all day, everyday; and awakened at night each time he is curled up in the corner of his bed or otherwise outside the guards’ full view. Is there anyone who doubts that these measures — and especially this prolonged forced nudity — are punitive and designed to further erode his mental health, physical health and will? As The Guardian reported last year, forced nudity is almost certainly a breach of the Geneva Conventions; the Conventions do not technically apply to Manning, as he is not a prisoner of war, but they certainly establish the minimal protections to which all detainees — let alone citizens convicted of nothing — are entitled.

Moreover, Greenwald points out, correctly I think, the media seems to be giving the Obama Administration a pass here:

I’ll say this again: just fathom the contrived, shrieking uproar from opportunistic Democratic politicians and their loyalists if it had been George Bush and Dick Cheney — on U.S. soil — subjecting a whistle-blowing member of the U.S. military to these repressive conditions without being convicted of anything, charging him with a capital offense that statutorily carries the death penalty, and then forcing him to remain nude every night and stand naked for inspection outside his cell. Feigning concern over detainee abuse for partisan gain is only slightly less repellent than the treatment to which Manning is being subjected.

Indeed. It’s understandable, to be honest, why the right wouldn’t care all that much about how Private Manning is being treated. If this were happening under a Republican, though, the left would be united in outrage. Now, their silence is telling

Make no mistake about it. I do not consider Bradley Manning a hero in any sense of the word. Even if it were the case that much of the material that Manning stole from military computers should not have been classified, or really wasn’t all that important (and much of it wasn’t in the end), that isn’t a decision that a Private in the Army has a right to make. If the charges against him are true, he violated orders, accessed systems he had no right to access, and stole information that he had no right to take off base. If he’s convicted of these charges, he deserves to be punished to the fullest extent of the law. While he’s awaiting trial, though, and even after he’s convicted, he still must be treated humanely and, at present, Manning is receiving worse treatment than a Prisoner Of War would, and the only purpose behind it seems to be to break him psychologically. That’s simply unacceptable.

But can this treatment really be justified? There are two points to address on this front.

First and most simply put, Manning made the comment about being able to kill himself with his underwear, sarcastic or not. Can you imagine what would be said if the brig commander did nothing and then he actually did turn up dead in his cell by his own waistband? It would be a movable feast for the media and several careers would come to an abrupt end. How does the commander ignore something like that?

The second point is a bit more complicated and far less clear, and one that we’ve touched on here in the past. It boils down to some of the fundamental differences between civilian society and the military community. Just as civilians, used to all their freedoms of free speech, etc. don’t understand the restrictions on military personnel, those familiar with the civilian justice system are frequently shocked by many of the “unofficial” aspects of the U.C.M.J. Lots of things like this go on all the time in the military, or at least they used to back in the day. But normally you don’t have the civilian press watching and reporting on it.

Does that make it right? I leave that to the judgment of the reader.

Also, life in the military in general is just a bit more physical and harsh than in the civilian world. A lot of things happen which would probably shock many of you who have never served. In the Navy, for example, there is an old tradition of an initiation rite of passage the first time a sailor crosses the equator on a war ship. It is the time when you graduate from being a “pollywog” (or just “wog” for short) to being a “shellback.” Trust me, it’s an ordeal, usually lasting 24 hours or more.

The third time I made the passage, two enlisted men wound up in sick bay with broken arms. Everyone got to experience the joys of crawling through plastic chutes filled with garbage, rotting food and bilge water, all the while being “herded” by shellbacks wielding foot long lengths of fire hose, loving called, “shillelaghs.” (During my own initiation it took more than a week before the bruises finally faded.) And this is all for your friends who have done nothing wrong.

I’ll leave it for one of the veteran submarine sailors to tell you about the grand old tradition of having your dolphins “tacked on” if they wish to do so in comments.

So I suppose our final question is, does any of this make it acceptable for Manning to be treated in this fashion, either to cover the brig commander’s butt or for the sake of teaching a lesson to somebody mouthing off to their superiors? I really don’t know. Maybe we do need to shine a light on this and review military procedures, both official and “under the covers.” But I do know that life in the military community is a lot different than in the civilian world, and having lived it for a number of years myself, this story honestly didn’t shock me at all.

There is only one word to describe the treatment of this model prisoner: sadism. Glenn Greenwald has been following the case closely and has two disturbing must-reads here and here. We all hoped that under Obama, brutal treatment of military prisoners and lies about it would end. In this case, they haven’t.

I understand that Bradley Manning has probably done something very wrong, for which, if guilty, he deserves a hefty jail sentence and the contempt of his fellow citizens. But this is not what a decent country does to its citizens.

When I was selected as one of the two human players to be pitted against IBM’s “Watson” supercomputer in a special man-vs.-machine Jeopardy! exhibition match, I felt honored, even heroic. I envisioned myself as the Great Carbon-Based Hope against a new generation of thinking machines—which, if Hollywood is to believed, will inevitably run amok, build unstoppable robot shells, and destroy us all. But at IBM’s Thomas J. Watson Research Lab, an Eero Saarinen-designed fortress in the snowy wilds of New York’s Westchester County, where the shows taped last month, I wasn’t the hero at all. I was the villain.

This was to be an away game for humanity, I realized as I walked onto the slightly-smaller-than-regulation Jeopardy! set that had been mocked up in the building’s main auditorium. In the middle of the floor was a huge image of Watson’s on-camera avatar, a glowing blue ball crisscrossed by “threads” of thought—42 threads, to be precise, an in-joke for Douglas Adams fans. The stands were full of hopeful IBM programmers and executives, whispering excitedly and pumping their fists every time their digital darling nailed a question. A Watson loss would be invigorating for Luddites and computer-phobes everywhere, but bad news for IBM shareholders.

The IBM team had every reason to be hopeful. Watson seems to represent a giant leap forward in the field of natural-language processing—the ability to understand and respond to everyday English, the way Ask Jeeves did (with uneven results) in the dot-com boom. Jeopardy! clues cover an open domain of human knowledge—every subject imaginable—and are full of booby traps for computers: puns, slang, wordplay, oblique allusions. But in just a few years, Watson has learned—yes, it learns—to deal with some of the myriad complexities of English. When it sees the word “Blondie,” it’s very good at figuring out whether Jeopardy! means the cookie, the comic strip, or the new-wave band.

I expected Watson’s bag of cognitive tricks to be fairly shallow, but I felt an uneasy sense of familiarity as its programmers briefed us before the big match: The computer’s techniques for unraveling Jeopardy! clues sounded just like mine. That machine zeroes in on key words in a clue, then combs its memory (in Watson’s case, a 15-terabyte data bank of human knowledge) for clusters of associations with those words. It rigorously checks the top hits against all the contextual information it can muster: the category name; the kind of answer being sought; the time, place, and gender hinted at in the clue; and so on. And when it feels “sure” enough, it decides to buzz. This is all an instant, intuitive process for a human Jeopardy! player, but I felt convinced that under the hood my brain was doing more or less the same thing.

Indeed, playing against Watson turned out to be a lot like any other Jeopardy! game, though out of the corner of my eye I could see that the middle player had a plasma screen for a face. Watson has lots in common with a top-ranked human Jeopardy! player: It’s very smart, very fast, speaks in an uneven monotone, and has never known the touch of a woman. But unlike us, Watson cannot be intimidated. It never gets cocky or discouraged. It plays its game coldly, implacably, always offering a perfectly timed buzz when it’s confident about an answer. Jeopardy! devotees know that buzzer skill is crucial—games between humans are more often won by the fastest thumb than the fastest brain. This advantage is only magnified when one of the “thumbs” is an electromagnetic solenoid trigged by a microsecond-precise jolt of current. I knew it would take some lucky breaks to keep up with the computer, since it couldn’t be beaten on speed.

DID THE SINGULARITY just happen on Jeopardy? The Singularity is a process, more than an event, even if, from a long-term historical perspective, it may look like an event. (Kind of like the invention of agriculture looks to us now). So, yeah. “In the CNN story one of the machine’s creators admitted that he was a very poor Jeopardy player. Somehow he was able to make a machine that could do better than himself in that contest. The creators aren’t even able to follow the reasoning of the computer. The system is showing emergent complexity.”

I’m not a big Jeopardy geek, but my understanding is that players are surprised at how big a role button management plays in winning or losing a round. In the few minutes of the Watson game that I watched, it was pretty clear that Watson was excellent at pressing the button at exactly the right moment if it knew the answer, which is more a measure of electromechanical reflex than human-like intelligence.

To the credit of IBM engineers, Watson almost always did know the right answer. Still, there were a few bloopers, such as the final Jeopardy question from yesterday (paraphrasing): “This city has two airports, one named after a World War II hero, and the other named after a World War II battle.” Watson’s guess, “Toronto”, was just laughably bad—Lester Pearson and Billy Bishop fought in World War I, and neither person is a battle. The right answer, “Chicago”, was pretty obvious, but apparently Watson couldn’t connect Midway or O’Hare with WW II.

I was on the show, in 1996 or ’97, and success is based almost entirely on your reflexes — i.e., pushing the buzzer as soon as Trebek finishes reading the question, er, the answer. (I came in second, winning a dining-room set and other fabulous parting gifts, which I had to sell to pay the taxes on them.)The benefit to society would come if we could turn Alex Trebek into Captain Dunsel.

If I owned a gun, it would probably be in my mouth as I type this. I don’t know how the physics of that arrangement would work, but the mood in Chez Jim is darker than Mothra’s hairy crotch. I’ve just been sitting here listening to Weird Al’s weirdly prescient “I Lost on Jeopardy” in the dark, cuddling with a tapped-out bottle of WD-40. Humanity took a hit tonight. Our valiant human heroes made it close, but that Watson tore us new assholes in our foreheads. ALL OF US. That noise you heard driving to work was your GPS system laughing at you. While you were sneezing on the D train this morning your Kindle was giving you the finger. There is blood in the water this morning and this afternoon and forever more. This wasn’t like losing some Nerdgame like chess. Who the hell even knows how to play chess? The horsies go in little circles, right? “Jeopardy!” is the game that makes dumb people feel smart. Like National Public Radio, it’s designed to make people feel superior. And we just found out that people are not superior. No, not at all.I might personally call the whole thing a draw. I read Ken Jennings’ piece in Slate and I can tell the machine was just better at ringing the buzzer than him. If it was truly a battle of Humanity versus Accursed Frankensteinian Monstrosity there should have been one human and one monstrosity. Or one smart human, one machine and me. I could answer sportsy questions. And the rest of the time stay out of Ken’s way. No disrespect to Brad, but this is one fight that ought to have been fought one-on-one. Don’t make humans battle each other to save the world from machines. It’s too cruel. I’d sit back and let the goddamned human expert answer the tough questions. I’d just be there to figure out a way how to unplug the fucking thing when no one was watching. So, here’s the lineup for this Rematch that I demand, formally, right here on The Awl—which I know everyone at IBM reads—Me, Ken and your little Betamax.

And you have to put a little more at stake than just money. For Ken, Me and the Watson. Why did they call it Watson, anyway? Wasn’t Watson just Sherlock Holmes’ butler? And Alexander Graham Bell’s friend who was in the other room and got the first phone call. Why not call the thing what it is: HYDE. Or LILITH. Or Beezelbub of the Underland? Its dark, soulless visage no doubt crushed the very spirit of our human champions. Maybe force it to wear a blonde wig. And talk in Valley Girl language. “Like Oh My God, Gag Me with a Spoon, Alex. I’ll like take like Potpourri for like $800!”

This rematch should happen on Neutral Ground. I suggest Indianapolis. Halftime at the next Super Bowl. This gives Ken a chance to put the pieces of his broken ego back together. And for me to eat some Twinkies. There probably won’t even Be a Super Bowl because of the Looming Lockout, so America will just be watching commercials and various superstars mangling America’s Favorite Patriotic songs. Make IBM take their little Cabinet of Wonders on the Road. Get the military involved to make sure there are no shenanigans this time like plugging it into the Internet or texting it answers from the audience. Also, I want the damned thing to NOT be plugged into the Jeopardy game. It needs to be able to hear Alex and to read the hint on the little blue screen. How much time does it take a human to hear Alex and see it printed out and understand just what the hell the half-idiot writers of “Jeopardy!” were getting at? (Was a Dave Eggers mention really necessary during Wednesday night’s episode? The category was Non-fiction. And it’s obvious that Watson has some kind of super Amazon app embedded in its evil systems. The first 200 pages of Dave’s Heartbreaking Work of Staggering Genius were pretty good. Everything else is Twee Bullshit. “I am a dog from a short story. I am fast and strong. Too bad you know I die in the river from the title of this short story. Woooof!” I mean, seriously, “Jeopardy!” Get a library card. There are billions of other writers and I’ve seen at least 5 shows in which you’ve used some form of Dave Eggers. )

The computer-science department at the University of Texas at Austin hosted viewing parties for the first two nights of the competition.

“People were cheering for Watson,” says Ken Barker, a research scientist at Texas. “When they introduced Brad and Ken, there were a few boos in the audience.”

Texas is one of eight universities whose researchers helped develop the technology on which Watson is based. Many of the other universities hosted viewing parties for the three days of competition as well.

Mr. Barker says he was blown away by Watson’s performance on the show, particularly the computer’s ability to make sense of Jeopardy!‘s cleverly worded clues.

But the computer did make a few mistakes along the way.

Most notably, Watson incorrectly wrote “Toronto” in response to a Final Jeopardy clue in the category of U.S. Cities. Both Mr. Jennings and Mr. Rutter returned the correct response, which was Chicago.

Mr. Barker says Watson may have considered U.S. to be a synonym of America and, as such, considered Toronto, a North American city, to be a suitable response.

Raymond J. Mooney, a computer-science professor at Texas, says Final Jeopardy is the Achilles heel of the computer.

“If it didn’t have to answer that question, it wouldn’t have,” he says.

Clues in that final round are often more complicated than others in the show because they involve multiple parts.

The phrasing of the question Watson got wrong included what linguists refer to as an ellipsis, an omitted phrase whose meaning is implicit from other parts of the sentence. The clue that tripped up Watson, “Its largest airport is named for a World War II hero; its second largest, for a World War II battle,” left out “airport is named” in the second clause.

Mr. Mooney says it will be some time before the average person will be using a computer with the capabilities of Watson, but he did see one potential immediate impact from the show.

After a tip from Crowdleaks.org, The Tech Herald has learned that HBGary Federal, as well as two other data intelligence firms, worked to develop a strategic plan of attack against WikiLeaks. The plan included pressing a journalist in order to disrupt his support of the organization, cyber attacks, disinformation, and other potential proactive tactics.

Update:

The Tech Herald was able to get in touch with Glenn Greenwald for his reaction to being singled out in the WikiLeaks proposal. He called the report creepy and disturbing. Moreover, he commented that the suggestions for dealing with WikiLeaks, along with the assumption that the organization could be undermined, were “hard to take seriously.”

The listed mitigations, such as disinformation or submitting false documents, have been discussed before. In 2008, the Pentagon had similar ideas, so that aspect of the document was nothing new.

Greenwald, as a journalist, is a prolific writer on media topics. He is a harsh critic of political figures and the mainstream media. The suggestion made by the proposal that he would pick career over cause is “completely against” what he is about, he told us.

“The only reason I do what I do is because im free to put cause before career,” he said.

Pointedly, he reminded us that his work includes taking aim at political figures, which could be a source of professional leverage with scoops or favors, as well as news organizations who could offer him gainful employment. None of these actions paints a picture of a man who would pick career over his passion.

Update 2:

WikiLeaks is hosting an official mirror of the sixth and final draft of the report. You can see a copyhere.

Update 3:

Palantir Technologies has severed all ties with HBGary Federal and issued an apology to reporter Glenn Greenwald. More details here.

According to a report in the Tech Herald, three security firms recently pitched the Bank of America with a plan to take down WikiLeaks. If the documents at the core of the story are legit — and as Andy Greenberg of Forbes notes, “their level of detail would require immense effort on the part of counterfeiters” — the companies come off as Keystone Kops.

The most interesting detail is that the firms involved — HBGary Federal, Palantir Technologies, and Berico Technologies — placed a lot of emphasis on the pro-WikiLeaks blogger Glenn Greenwald, arguing that “Without the support of people like Glenn wikileaks would fold,” so “It is this level of support that needs to be disrupted.” The firms are confident that this can be done, since “most of them if pushed will choose professional preservation over cause, such is the mentality of most business professionals.”

The source of the documents is a massive trove of HBGary emails that was seized and released by Anonymous. The backstory behind that is pretty fascinating in itself.

— Glenn was critical in the Amazon to OVH transition
— It is this level of support that needs to be disrupted
— These are established professionals that have a liberal bent, but ultimately most of them if pushed will choose professional preservation over cause, such is the mentality of most business professionals.
— Without the support of people like Glenn, Wikileaks would fold

A bizarre plan for an attack on the whistle-blowing site WikiLeaks and journalists construed as sympathetic to it — first reported by the Tech Herald — clearly targets Salon’s Glenn Greenwald, saying that his “level of support” for WikiLeaks “needs to be disrupted.” The report (you can download the purported final draft here) is listed as an “overview by Palantir Technologies, HBGary Federal and Berico Technologies,” and according to a string of e-mails also leaked, was developed following a request from Hunton and Williams, a law firm that represents, among others, Bank of America.

Bank of America is the presumed next target of WikiLeaks, and has reportedly been bracing for what’s to come.

The leaked report singles out other journalists, as well, and suggests that “these are established professionals that have a liberal bent, but ultimately most of them if pushed will choose professional preservation over cause …” And goes on: “Without the support of people like Glenn wikileaks would fold.”

Now aside from the predictable, but nevertheless rather shocking detail, that these security firms believed the best way to take WikiLeaks out was to push Glenn to stop supporting them, what the fuck are they thinking by claiming that Glenn weighs “professional preservation” against “cause”? Could they be more wrong, painting Glenn as a squeamish careerist whose loud support for WikiLeaks (which dates back far longer than these security firms seem to understand) is secondary to “professional preservation”? Do they know Glenn is a journalist? Do they know he left the stuffy world of law? Have they thought about why he might have done that? Are they familiar at all with who Glenn is? Do they really believe Glenn became a household name–to the extent that he did–just in December?

I hope Bank of America did buy the work of these firms. Aside from the knowledge that the money would be–to the extent that we keep bailing out Bank of America–taxpayer money, I’d be thrilled to think of BoA pissing away its money like that. The plan these firms are pushing is absolutely ignorant rubbish. They apparently know almost nothing about what they’re pitching, and have no ability to do very basic research.

Which is precisely the approach I’d love to see BoA use to combat whatever WikiLeaks has coming its way.

My initial reaction to all of this was to scoff at its absurdity. Not being familiar with the private-sector world of internet security, I hadn’t heard of these firms before and, based on the quality of the proposal, assumed they were just some self-promoting, fly-by-night entities of little significance. Moreover, for the reasons I detailed in my interview with The Tech Herald — and for reasons Digby elaborated on here — the very notion that I could be forced to choose “professional preservation over cause” is ludicrous on multiple levels. Obviously, I wouldn’t have spent the last year vehemently supporting WikiLeaks — to say nothing of aggressively criticizing virtually every large media outlet and many of their leading stars, as well as the most beloved political leaders of both parties — if I were willing to choose “career preservation over cause.”

But after learning a lot more over the last couple of days, I now take this more seriously — not in terms of my involvement but the broader implications this story highlights. For one thing, it turns out that the firms involved here are large, legitimate and serious, and do substantial amounts of work for both the U.S. Government and the nation’s largest private corporations (as but one example, see this email from a Stanford computer science student about Palantir). Moreover, these kinds of smear campaigns are far from unusual; in other leaked HB Gary emails, ThinkProgress discovered that similar proposals were prepared for the Chamber of Commerce to attack progressive groups and other activists (including ThinkProgress). And perhaps most disturbing of all, Hunton & Williams was recommended to Bank of America’s General Counsel by the Justice Department — meaning the U.S. Government is aiding Bank of America in its defense against/attacks on WikiLeaks.

That’s why this should be taken seriously, despite how ignorant, trite and laughably shallow is the specific leaked anti-WikiLeaks proposal. As creepy and odious as this is, there’s nothing unusual about these kinds of smear campaigns. The only unusual aspect here is that we happened to learn about it this time because of Anonymous’ hacking. That a similar scheme was quickly discovered by ThinkProgress demonstrates how common this behavior is. The very idea of trying to threaten the careers of journalists and activists to punish and deter their advocacy is self-evidently pernicious; that it’s being so freely and casually proposed to groups as powerful as the Bank of America, the Chamber of Commerce, and the DOJ-recommended Hunton & Williams demonstrates how common this is. These highly experienced firms included such proposals because they assumed those deep-pocket organizations would approve and it would make their hiring more likely.

That’s what this anti-WikiLeaks campaign is generally: it’s a concerted, unified effort between government and the most powerful entities in the private sector (Bank of America is the largest bank in the nation). The firms the Bank has hired (such as Booz Allen) are suffused with the highest level former defense and intelligence officials, while these other outside firms (including Hunton & Williams and Palantir) are extremely well-connected to the U.S. Government. The U.S. Government’s obsession with destroying WikiLeaks has been well-documented. And because the U.S. Government is free to break the law without any constraints, oversight or accountability, so, too, are its “private partners” able to act lawlessly. That was the lesson of the Congressional vesting of full retroactive immunity in lawbreaking telecoms, of the refusal to prosecute any of the important Wall Street criminals who caused the 2008 financial crisis, and of the instinctive efforts of the political class to protect defrauding mortgage banks.

New York, NY, February 2, 2011 – Today Rupert Murdoch, Chairman and Chief Executive Officer of News Corporation, unveiled The Daily — the industry’s first national daily news publication created from the ground up for iPad.

“New times demand new journalism,” said Mr. Murdoch. “So we built The Daily completely from scratch — on the most innovative device to come about in my time — the iPad.”

“The magic of great newspapers — and great blogs — lies in their serendipity and surprise, and the touch of a good editor,” continued Mr. Murdoch. “We’re going to bring that magic to The Daily — to inform people, to make them think, to help them engage in the great issues of the day. And as we continue to improve and evolve, we are going to use the best in new technology to push the boundaries of reporting.”

The Daily’s unique mix of text, photography, audio, video, information graphics, touch interactivity and real-time data and social feeds provides its editors with the ability to decide not only which stories are most important — but also the best format to deliver these stories to their readers.

A new edition will come out every day, with updates throughout the day. it will feature a carousel navigation that looks like Coverflow, an dinclude video and 360-degree photographs.

Since there are no trucks and no printing costs, The Daily will cost 14 cents a day or about $1 a week. The first two weeks are free, thanks to a sponsorship by Verizon. You will be able to download it live at noon ET.

Murdoch also revealed that the total cost to get the Daily up and running—the technology, the staff, everything—has been $30 million, and that operating costs are half a million dollars a week.

I asked Murdoch why he thinks it is better to charge a subscription versus gaining a larger audience via free downloads and selling that larger audience to advertisers, who are lining up anyway because their ads look so much better in an iPad app. “I think they will pay much less per thousand if it was free,” says Murdoch. “We feel this is better for advertisers and will draw a better class of advertisers at a better rate.”

Of course, he seems really adamant about his project. His letter is full of Cupertinian hyperbole: “this pioneering digital venture, fully championed by Steve Jobs and the rest of his team at Apple, establishes an entirely new category of delivery and consumption.” An entire new category. It must be really magical. This fair and balanced quote, however, makes me think The Daily may be just another glorified reader with lots of video thrown in: “I’m convinced that what they’ve created is the most immersive and unique experience available – one that will resonate with our audiences everywhere and change the way news is viewed.”

The Daily’s formal debut is in a few hours, at which point we’ll have no shortage of pro/con opinions about News Corp.’s new iPad newspaper.But until then, here are the reasons the Daily won’t work, followed by the reasons it will. They’re both from the same guy–Stifel Nicolaus analyst Jordan Rohan. From his note published yesterday:

CONS:

1. Consumer Acceptance Could Take Time: Nobody really knows the future of the iPad daily, and the official launch party is not “where the rubber meets the road” in terms of understanding consumer acceptance of such a new concept.

2. Hype or Reality?: Hype does not necessarily translate into market share, revenue, or cash flow.

3. Control: Apple tends to control its environment so tightly that there may be clashes down the road with apps offered by Yahoo!, Google, Facebook, AOL, Amazon, and a host of other Internet companies. This could reduce overall profit potential for iPad publishers.

4. Understanding the revenue model will be key. Online ad networks and other intermediaries could be left on the outside, looking in, if the iPad remains a premium offering with high CPMs. The subscription model is somewhat irrelevant unless it scales to support a vibrant advertising environment. We will have to wait and see on that key point.

PROS:

1. Product Differentiation: News Corp could marshal the resources of its newspaper, cable television, studio, and Internet divisions to differentiate the product from most other companies.

2. Apple is a powerful ally. The recent track record of product innovation and commercialization at Apple is unmatched. If Apple is willing to throw its weight behind this initiative, along with News Corp, then the chances of success are high.

3. Playing Offense: If News Corp can make an iPad daily work, then other media companies will begin to play offense as well. And that is generally a good thing for innovation, and ultimately for advertisers and marketers alike.

4. Makes More Sense than Wired for iPad: Mid last year, we attended a pre-launch event for Wired magazine’s iPad initiative, which Conde Naste marketed at a surprising $5 per copy. The product was beautiful, but results were mixed at best. And it was a monthly, not a daily, which implied that the frequency of visitation was much lower.

Rohan, by the way, is ultimately bullish on the Daily, and he was that way before he got a look at the thing at Rupert Murdoch’s apartment last night. Now he’s very, very bullish, but he’s been embargoed from talking about it until noon today.

Unlike many existing print and newspaper magazine conversion apps, The Daily seems to feature a lot of clickable and interactive elements. Web links will bring up pages in a built-in browser, and Twitter feeds are accessible from within the app. There’s also an in-app text and audio commenting system for greater reader interaction. The app will also be able to pull in breaking news using Twitter and other sources, so that it stays fresh throughout the day without undergoing the kind of massively frequent overhaul you see on blogs. It’ll be interesting to see how The Daily strikes this balance.

No back-issues will exist at launch, and users instead will have to save articles for later from within the app or retrieve them on the web via HTML. Plans for improved access to older content are in the works, but won’t be included at launch.

At launch today, The Daily will be available only to customers shopping in the U.S. store, and will be free for the first two weeks. According to a leaked official memo published by Gizmodo (which was completely accurate regarding other details), News Corp. is planning to bring The Daily to international markets (and other tablets) in the coming months.

Apple VP of Internet Services Eddy Cue announced the inclusion of new in-app recurring subscription billing with “one click,” but didn’t offer any further details. Cue noted that an upcoming (“soon” was the only timeline hinted at) Apple announcement would detail this new feature further, including implementation plans among other publishers.

There is no question that the partnership between Apple and News Corp. is a big story worth covering, as it received a lot of deserved attention months ago when it was announced. And yes, Rupert Murdoch is arguably the single most powerful media mogul (best evidenced by his place on the Power Grid); his enthusiasm and embracing of a new media platform (and pouring of $30 Million into its development) is a compelling and relevant story.

But the story unfolding in Egypt right now could not be more compelling, since it appears that the American ally (with huge strategic influence on the U.S. economy) is on the brink of complete and total destabilization. Ironically, the Murdoch-led press conference was introduced by Fox News’ Neil Cavuto, an individual who has repeatedly reported the relevance of the Egyptian uprising on the price of oil. The decision to go with The Daily press event over the revolution in Egypt seems odd at best.

Obviously, other news networks continue to air short, fluff pieces in between their Egypt coverage, and if Fox had relegated this to such a segment, clearly disclosing the relationship, then they’d be much less open to criticism. But this was neither short nor fluff.

Clearly this event was planned well in advance of the upheaval in Egypt, and when two giant corporations like Apple and News Corp. partner, it is big news (particularly with regard to the future of media and news.) But the Fox News’ decision to forgo real news coverage in Egypt for the promotion of a new commercial information platform (from which they hope to profit) seems to be at best a perfectly ironic example of the state of media today.

It was supposed to be Wall Street’s hottest tech deal in years: the private offering of as much as $1.5 billion in shares of Facebook Inc. And it was a coup for the company’s adviser, Goldman Sachs Group Inc., the most envied firm on the Street.

Goldman bankers burned up the phone lines in the first week of January, pushing many of their best American clients to invest in the deal. And then, on Sunday and Monday, those same advisers were on the phone with those same clients with some bad news. They wouldn’t be getting any Facebook shares after all.

Now, Goldman has a very different mission to execute: soothing a legion of irate investors.

Goldman Sachs experienced a slowdown in many of its divisions in the fourth quarter, and earnings dropped 53 percent, to $2.39 billion, or $3.79 a share.

While the per-share profit in the quarter was modestly higher than the $3.76 a share analysts polled by Thomson Reuters were projecting, it was a stark reminder of how challenging the markets had been for firms like Goldman during the last year.

David Viniar, Goldman’s chief financial officer, told analysts in a conference call on Wednesday that the revenue slowdown came amid client uncertainty about the economy and regulatory reform. With client activity down, fees dropped, too.

Revenue in its powerful fixed income, currency and commodities unit, known as F.I.C.C., fell 48 percent, to $1.64 billion, from the period a year earlier. Investment revenue, which includes equity and debt underwriting, fell 10 percent, to $1.51 billion.

Over all, net revenue in the quarter was $8.6 billion, off 10 percent from the period a year earlier. For the year, revenue minus interest expenses fell 13 percent, to $39 billion, compared with 2009. Full-year earnings were $8.35 billion, 38 percent lower than 2009.

“Market and economic conditions for much of 2010 were difficult, but the firm’s performance benefited from the strength of our global client franchise and the focus and commitment of our people,” Lloyd C. Blankfein, chairman and chief executive, said in a statement. “Looking ahead, we are seeing signs of growth and more economic activity, and we are well-positioned to help our clients expand their businesses, manage their risks and invest in the future.”

As the bank was reminded earlier this week, though, money can’t buy Friends: Goldman’s abrupt inability to sell shares of Facebook to select American investors has not sat well with select American investors, or with Facebook. “They pushed me hard to get here and invest, and then they pull the rug out from under me,” one such spurned Goldman client told The Wall Street Journal. “The whole thing has left a bad taste in my mouth.” To describe the highly public, fruitless Facebook fiasco, one might even invoke a phrase from Goldman’s recent past: “shitty deal.”

Earlier this month, Goldman solicited certain investors with poorly written offers to purchase Facebook stock. However, given the round-the-clock, breathless coverage of the firm’s $450 million investment in Facebook, Goldman rescinded the offer to U.S. clients in deference to “rules limiting [the] marketing of private securities.” according to Bloomberg.com. “Goldman Sachs concluded that the level of media attention might not be consistent with the proper completion of a US private placement under US law,” the bank said in a statement on Monday. “We regret the consequences of this decision, but Goldman Sachs believes this is the most prudent path to take.”

Facebook executives were reportedly “miffed” about the public scrutiny surrounding the investment opportunity, according to the Journal. The offering “turned out to be far more public than they expected.” Should have checked the privacy settings!

What does this mean? Over at Dealbook, Andrew Ross Sorkin fills in some details: “Federal and state regulations prohibit what is known as ‘general solicitation and advertising’ in private offerings. Firms like Goldman seeking to raise money cannot take action that resembles public promotion of the offering, like buying ads or communicating with news outlets.”

So Goldman couldn’t go ahead with the Facebook offering because it would be getting too many media inquiries? Come on. Only last week, Groupon, the group-buying Web site, raised $950 million in a private placement arranged by Allen & Co., the boutique investment bank. Extensive media coverage of that deal didn’t prevent some of Silicon Valley’s leading venture capital firms from plonking down almost a billion dollars, which Groupon is planning on using to fund its expansion prior to an I.P.O.

Goldman could easily have arranged a similar money-raising exercise for Facebook. However, it probably wouldn’t have been able to do such a deal at a valuation of fifty billion dollars—the price it has purportedly put on Mark Zuckerberg’s business. Despite Facebook’s rapid growth, many venture-capital outfits would have been reluctant to buy its equity at a multiple of thirty or forty times revenues. (Estimates of Facebook’s revenues range from one to two billion.) Rather than tapping the VCs at a lower valuation, Goldman decided to set up a special-purpose vehicle (i.e., a shell company) through which hundreds, and perhaps thousands, of wealthy individuals (American and foreign) would be offered the privilege of purchasing Facebook stock prior to an I.P.O.

With all due respect to Goldman and its high-priced attorneys, it wasn’t a hostile media that upended this plan. It was the fact that it appeared to many people (not just reporters) to be a blatant effort to circumvent the Securities Exchange Act of 1934, which decrees that any company with more than five hundred shareholders is legally obliged to issue public financial statements, something that Facebook is keen to avoid, at least for now. Under Goldman’s scheme, all the investors in its special-purpose vehicle would be counted as a single “beneficial” shareholder, thereby excluding Facebook from this disclosure provision. (An illuminating discussion of the legal niceties can be found at Dealbook.)

Having been a keen observer of Goldman for some twenty-five years (sometimes as a critic but often as an admirer of its meritocratic culture and the quality of the people it employs), little that the firm does surprises me. But this entire imbroglio has left me puzzled and raised more questions in my mind about Goldman’s senior management.

It is surely fair to assume that the bright spark in Goldman’s investment-banking division who came up with the original Facebook proposal hadn’t seen the report of the Business Standards Committee. Let’s further stipulate that when somebody more senior asked him (her) if the deal was legit, he (she) said, a) Goldman’s top lawyers had signed off on it, and b) it would give Goldman a lock on Facebook’s I.P.O., which many bankers expect to be the biggest (and most lucrative) yet seen in the United States.

In other words, Facebook has a speculative shareholder for the first time, now that it’s made its decision to get into bed with Goldman. And Goldman will think nothing of buying puts or selling calls on Facebook shares — or even dumping its shares outright, if it’s allowed to do so — if that’s what it needs to do to protect its $450 million investment.

As the same time, however, one of the main unwritten rules of IPOs of young companies is that they always need to be priced at a level above their last funding round. If Facebook can’t IPO at a valuation significantly north of $50 billion, then it probably won’t come to market at all. (That probably explains why bidders on SecondMarket are happy to buy at a $70 billion valuation: they’re betting that when Facebook goes public, it’ll be worth more than that.)

A lot of stuff can happen to Facebook between now and a 2012 IPO. And if Goldman is shorting Facebook rather than massaging its valuation and orchestrating an IPO which values the company at $70 billion or more, then maybe Facebook won’t go public at all next year. Maybe, indeed, Facebook will learn from this whole episode that dealing with investment banks is an unpleasant and expensive exercise, and will try to avoid doing so in future as much as it possibly can.

The Facebook deal itself was already going to be controversial, because at first blush it came off like Goldman finding a way to skirt securities regulations (though later it was made clear that regardless of whether it did a real IPO, Facebook would report financials).

Over the weekend I tried to buy a new dishwasher. Being the fine net-friendly fellow that I am, I began Google-ing for information. And Google-ing. and Google-ing. As I tweeted frustratedly at the tend of the failed exercise, “To a first approximation, the entire web is spam when it comes to appliance reviews”.

This is, of course, merely a personal example of the drive-by damage done by keyword-driven content — material created to be consumed like info-krill by Google’s algorithms. Find some popular keywords that lead to traffic and transactions, wrap some anodyne and regularly-changing content around the keywords so Google doesn’t kick you out of search results, and watch the dollars roll in as Google steers you life-support systems connected to wallets, i.e, idiot humans.

Google has become a snake that too readily consumes its own keyword tail. Identify some words that show up in profitable searches — from appliances, to mesothelioma suits, to kayak lessons — churn out content cheaply and regularly, and you’re done. On the web, no-one knows you’re a content-grinder.

The reason why this has happened is obvious: Google is the 900-pound gorilla of search, with around 90% of the market (excluding China and Russia), and there’s an entire industry which has grown up specifically around tickling the gorilla to make it happy and enrich the ticklers. I’ve not come across anyone who describes their job as “Bing results optimisation”, nor who puts that at the top of their business CV. Well, I’m sure there are people inside Microsoft whose job title is exactly that. But not outside it.

There are two lines of thought on what happens next.

1) Google comes back from the Christmas break newly determined to fix those damned scraping sites that don’t originate content, because it says in its own webmaster guidelines that “Google will take action against domains that try to rank more highly by just showing scraped or other auto-generated pages that don’t add any value to users.”

The only value those scrapers add, in fact, is to Google, because they display tons of AdSense ads. (Well, you can make a fair bet that they aren’t Bing’s equivalent.)

Wait – the scrapers that dominate the first search page, the place from which 89% of clicks come (for only 11% of clicks come from the last 990 results out of the first thousand, or at least did in 2006, a number that has probably only shifted down since then) all benefit Google financially, even while it sees market share improvements? That’s not quite the disincentive one might have hoped for that would make Google act.

2) People start not using Google, because its search is damn well broken and becoming more broken for stuff you care about by the day. This could happen. The question is whether it would be visible enough – that is, whether enough people would do it – that it would show up on Google’s radar and be made a priority.

Over at Hacker News, the suggestions in the comments echo the idea that Google’s search really isn’t cutting the mustard any more (“vertical search” is the new watchword). Which means that really, Google does need to implement method (1) above. It might not notice if a few geeks abandon it – but once the idea really gets hold (as it will through the links they offer and comments they drop) that Google’s search is broken, then the rout begins.

I haven’t been able to get a comment from Google on this, though I’m sure it would run something along the lines of “Google makes every effort to make its search results the best and takes seriously the issues raised here.”

Update: Google responded to this article: “Google works hard to preserve the quality of our index and we’re continuing to make improvements to this. Sites that abuse our quality guidelines or prove to be spam are removed from our index as fast as possible”. (For clarification, I didn’t initially contact Google as it was a public holiday when I wrote the original article. Matt Cutts did not respond to Twitter contact as he is on holiday, Google says.)

It would be crazy not to. The question is whether it really can make a difference.

This semester, my students at the School of Information at UC-Berkeley researched the VC system from the perspective of company founders. We prepared a detailed survey; randomly selected 500 companies from a venture database; and set out to contact the founders. Thanks to Reid Hoffman, we were able to get premium access to LinkedIn—which was very helpful and provided a wealth of information. But some of the founders didn’t have LinkedIn accounts, and others didn’t respond to our LinkedIn “inmails”. So I instructed my students to use Google searches to research each founder’s work history, by year, and to track him or her down in that way.

But it turns out that you can’t easily do such searches in Google any more. Google has become a jungle: a tropical paradise for spammers and marketers. Almost every search takes you to websites that want you to click on links that make them money, or to sponsored sites that make Google money. There’s no way to do a meaningful chronological search.

We ended up using instead a web-search tool called Blekko. It’s a new technology and is far from perfect; but it is innovative and fills the vacuum of competition with Google (and Bing).

Blekko was founded in 2007 by Rich Skrenta, Tom Annau, Mike Markson, and a bunch of former Google and Yahoo engineers. Previously, Skrenta had built Topix and what has become Netscape’s Open Directory Project. For Blekko, his team has created a new distributed computing platform to crawl the web and create search indices. Blekko is backed by notable angels, including Ron Conway, Marc Andreessen, Jeff Clavier, and Mike Maples. It has received a total of $24 million in venture funding, including $14M from U.S. Venture Partners and CMEA capital.

In addition to providing regular search capabilities like Google’s, Blekko allows you to define what it calls “slashtags” and filter the information you retrieve according to your own criteria. Slashtags are mostly human-curated sets of websites built around a specific topic, such as health, finance, sports, tech, and colleges. So if you are looking for information about swine flu, you can add “/health” to your query and search only the top 70 or so relevant health sites rather than tens of thousands spam sites. Blekko crowdsources the editorial judgment for what should and should not be in a slashtag, as Wikipedia does. One Blekko user created a slashtag for 2100 college websites. So anyone can do a targeted search for all the schools offering courses in molecular biology, for example. Most searches are like this—they can be restricted to a few thousand relevant sites. The results become much more relevant and trustworthy when you can filter out all the garbage.

The feature that I’ve found most useful is the ability to order search results. If you are doing searches by date, as my students were, Blekko allows you to add the slashtag “/date” to the end of your query and retrieve information in a chronological fashion. Google does provide an option to search within a date range, but these are the dates when website was indexed rather than created; which means the results are practically useless. Blekko makes an effort to index the page by the date on which it was actually created (by analyzing other information embedded in its HTML). So if I want to search for articles that mention my name, I can do a regular search; sort the results chronologically; limit them to tech blog sites or to any blog sites for a particular year; and perhaps find any references related to the subject of economics. Try doing any of this in Google or Bing

Google has become a snake that too readily consumes its own keyword tail. Identify some words that show up in profitable searches — from appliances, to mesothelioma suits, to kayak lessons — churn out content cheaply and regularly, and you’re done. On the web, no-one knows you’re a content-grinder.

The result, however, is awful. Pages and pages of Google results that are just, for practical purposes, advertisements in the loose guise of articles, original or re-purposed. It hearkens back to the dark days of 1999, before Google arrived, when search had become largely useless, with results completely overwhelmed by spam and info-clutter.

The lead up to the Christmas and New Year holidays required researching a number of consumer goods to buy, which of course meant using Google to search for them and ratings reviews thereof. But this year it really hit home just how badly Google’s systems have been spammed, as typically anything on Page 1 of the search results was some form of SEO spam – most typically a site that doesn’t actually sell you anything, just points to other sites (often doing the same thing) while slipping you some Ads (no doubt sold as “relevant”).

…

Google is like a monoculture, and thus parasites have a major impact once they have adapted to it – especially if Google has “lost the war”. If search was more heterogenous, spamsites would find it more costly to scam every site. That is a very interesting argument against the level of Google market dominance.

Throughout my investigation I had nagging doubts that we were seeing serious cracks in the algorithmic search foundations of the house that Google built. But I was afraid to write an article about it for fear I’d be claimed an incompetent kook. I wasn’t comfortable sharing that opinion widely, because we might be doing something obviously wrong. Which we tend to do frequently and often. Gravity can’t be wrong. We’re just clumsy … right?

I can’t help noticing that we’re not the only site to have serious problems with Google search results in the last few months. In fact, the drum beat of deteriorating Google search quality has been practically deafening of late.

From there, Jeff links to several more examples, including the ones I mentioned above. As Alan alludes to in his post, the threat here is that Google has become a monoculture, a threat I’ve written about many times.

It turns out that the banana we all know and love — the Cavendish — is actually the second type of banana grown in enormous quantities and exported across Europe and North America. The first was the Gros Michel, which was wiped out by Tropical Race One; you might be saddened to hear that “to those who knew the Gros Michel the flavor of the Cavendish was lamentably bland.” Indeed, Chiquita was so sure that Americans would never switch to the Cavendish that they stuck with the Gros Michel for far too long, and lost dominance of the industry to Dole.

In both cases, the fact that the same species of banana is grown and eaten everywhere constitutes a serious tail risk, even if today’s desperate attempts to genetically modify a disease-resistant Cavendish bear fruit:

A new Cavendish banana still didn’t seem like a panacea. The cultivar may dominate the world’s banana export market, but, it turns out, eighty-seven per cent of bananas are eaten locally. In Africa and Asia, villagers grow such hetergeneous mixes in their back yards that no one disease can imperil them. Tropical Race Four, scientists now theorize, has existed in the soil for thousands of years. Banana companies needed only to enter Asia, as they did twenty years ago, and plant uniform fields of Cavendish in order to unleash the blight. A disease-resistant Cavendish would still mean a commercial monoculture, and who’s to say that one day Tropical Race Five won’t show up?

This is exactly what I was talking about a year ago, in my post about Dan Barber, world hunger, and locavorism, when I talked about how monocultures are naturally prone to disastrous outbreaks of disease, and how a much more heterogeneous system of eating a variety of locally-grown foods is much more robust and equally capable of feeding the planet.

[…]

The problems with monoculture aren’t purely agricultural, either. Anil Dash has a post up today about the decline of Google search quality, and diagnosing the problem as being that “Google has become a monoculture”; Alan Patrick quotes a commenter at Hacker News as saying that if search were more heterogeneous, spamsites would find it more costly to scam every site.

I’m not completely convinced that seeing large numbers of SEO sites atop search results for consumer goods is entirely a function of the fact that Google is a monoculture. My guess is that in fact what we’re seeing is simply the result of enormous numbers of SEO sites, all using slightly different methods of trying to game the Google algorithm. Even if only a small percentage of those SEO sites succeed, and even if they only succeed briefly, the result is still a first page of Google results dominated by SEO spam — a lose-lose proposition for everybody, but one which wouldn’t be solved by having heterogeneous algorithms: they would all simply have different SEO sites atop their various search-result pages.

But maybe if Google wasn’t a monoculture, there wouldn’t be quite as many SEO sites all trying to hit the jackpot of, however briefly, landing atop the Google search results. In general, monoculture is a bad and brittle thing — and that goes for search as much as it goes for bananas.

Brad DeLong takes us to two articles on trouble with Google: basically, scammers and spammers are doing their best to game the search engine, and in the process making it less useful to the rest of us. And people are turning to other search engines that are less affected, precisely because they’re less pervasive and the scammers and spammers haven’t adapted to them.

This makes me think of sex.

If you follow evolutionary theory, you know that one big question is why sexual reproduction evolved — and why it persists, given the substantial costs involved. Why doesn’t nature just engage in cloning?

And the most persuasive answer, as I understand it, is defense against parasites. If each generation of an organism looks exactly like the last, parasites can steadily evolve to bypass the organism’s defenses — which is why yes, we’ll have no bananas once the fungus spreads to cloned plantations around the world. But scrambling the genes each generation makes the parasites’ job harder.

So the trouble with Google is that it’s a huge target, to which human parasites — scammers and spammers — are adapting.

And that’s not all, there are a largenumber of otherposts which share the same thoughts on Google’s declining search quality.

While the major problems with Google’s search quality appear to be the rise of content farms and review sites, some posts also mention a number of other grey hat SEO tactics like link buying and doorway domains that are still working for some sites.

With the number of posts on this topic, I don’t think it will be long before a Google representative steps in to clear the air. In the mean time, what do you think about Google’s search results? Have you seen a decline in quality in recent months?